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Cover Story | November 2016

Roadmap for Indian textile machinery industry

Indian textile machinery industry has tremendous growth potential in coming future buoyed by growing domestic and global demand, says Avinash Mayekar of Suvin Advisors.

Global textile machinery market is witnessing tremendous growth buoyed by growing demand of textile and apparel market. It is forecasted to grow at a CAGR of 14.02 per cent till 2018. It is expected to reach to $207.5 billion in 2015. The major manufacturers of textile machinery are Germany, Italy, Switzerland, France and now China. China is leading in the field of textile exports today because they installed a large set-up for spinning and weaving industry. One of the major trends in the global textile machinery market is the growing number of technological innovations. The global market is divided into two parts, i.e., low cost manufacturing in developing countries (labour concentrated market) where cheap labour and lower version technology is available and high cost manufacturing in developed countries where labor is expensive and more automation is needed to reduce operation cost.

Indian textile machinery industry

The industry witnessed a growth of 8-10 per cent to Rs 22,000 crore in 2014 from Rs 20,000 crore in 2013. The size of India’s textile machinery industry is poised to double to Rs 45,000 crore in the next seven years from the present Rs 22,000 crore in light of new projects and emphasis on setting up textile parks. The textile machinery manufacturing section is one of the important segments of the machinery manufacturing industry in India. Our in-house production is insufficient to meet domestic demand.

This industry is nearly 60 years old and has more than 1,000 machinery and component manufacturing units. Nearly 300 units produce complete machinery and the remaining produce various textile machinery components. However, not all the units work to full capacity or even the optimum capacity level.

Except for the units in the spinning sector where the machinery are of international standards; in the other sectors, machinery manufacturing for weaving, knitting and wet-processing lack high level of quality standard and performance (in most of the cases) to compete with the European manufacturers.

Textile engineering goods industry is classified as follows:

  • Ginning and pressing machines
  • Spinning and allied machines
  • Synthetic filament yarn machines
  • Weaving and allied machines
  • Processing machines
  • Hosiery/RMG machines
  • Textile testing equipment
  • Multiple segments (combination of the above)
  • Accessories and parts
  • Others

In the weaving sector, shuttleless weaving machinery (rapier or airjet) and in the knitting sector (circular knitting and flat knitting) machinery hardly have any presence in the industry. The machinery manufacturing operation takes place at the organised and the unorganised sectors. In the organised sector, in addition to the public limited companies, machinery manufacturing is done in independent units, which have collaborative joint ventures with the foreign entities. In the decentralised sector, there are small-scale industrial units as well as tiny units engaged in the production of accessories pertaining to the textile machinery.

Majority of the production comes from the States of Tamil Nadu and Gujarat; collectively contributing around 84 per cent of the production. Around 87 per cent of the total production, i.e., textile machinery is coming from the six clusters namely Surat, Ahmedabad, Bengaluru, Coimbatore, Ludhiana and Mumbai. These clusters are strategically located to serve the textile industry and have the affiliation to produce the kind of machinery required by the industry. Ahmedabad is a cluster of weaving. Currently most of textile machinery is consumed within the country, so there is very less scope for the export.

There are many small and medium enterprises involve in the production of textile machinery and its parts, but there are few players who have been holding their position in field of textile machine manufacturing and they are as follow: LMW, Rieter, Prashant Gamatex, Yamuna Machine Works, Trutzschler, to name a few.

Most of the textile machinery manufacturing units are under utilisation. Not all the textile machinery manufacturing units in India work to full capacity or even the optimum capacity level.

Indian imports for textile machinery parts and accessories are growing at a CAGR of 25 per cent in last few years, whereas exports are very low as compare to imports, but it is also showing increasing trend and it is increasing at a CAGR of 36 per cent.

Domestic demand for textile machinery is increasing at a CAGR of 17 per cent over the year. The demand is increasing; but demand met by indigenous manufacturer is not even half of the total demand.

Problems faced

The major problem in the textile machinery manufacturing industry is the lack of investment in R&D, except for the manufacturing units who have technical collaboration with reputed foreign companies; no progress has been made in the quality of the machinery produced. This dependence on borrowed technology and want of research has kept most of the sectors except spinning machinery sector far behind in the standard and performance of the machinery produced. This has resulted in the import of second hand machinery especially in the area of weaving thus discouraging the advancement of technology in the manufacturing of similar machinery in India. Lack of systematic fiscal support to the industry by the Government has also added to the problems.

Growth drivers

Purchase of new machinery is the key growth driver of the market. One of the major growth drivers for global machinery market is the strong economic recovery; post-recession, increasing demand for textile products, and environment friendly fibers, and a growing demand in the developing countries. Today machinery manufacturers produce textile machineries at competitive prices, and sophisticated machines of higher speed, and production capacity. Presence of numerous small scale players also makes the machinery sector more competitive. Along with them, MNCs have also entered the global arena, taking the competition to the next level, driving companies to work on their productivity and innovation.

The global demand of textile machinery is rising due to growing demand of textile industry. Today, textile machinery sourcing is majorly done from European countries, which is relatively costly. India is strategically located from most of major textile & apparel producing countries and India has good potential to explore global opportunities & tap global market. India has to first focus on exports to the neighboring countries which are emerging as significant textile producers.

Summary

Indian textile machinery industry has tremendous growth potential in coming future buoyed by growing domestic and global demand; the only need is to identify the untapped opportunities. Though Indian machinery industry is currently having strong presence in spinning & processing sector, we have not at all explored the big opportunities in weaving sector.

The growing demands of fabric all across the world will make weaving as a booming sector in coming future. Considering, India’s strategic location, we can very well meet the demands of most of the Asian countries. Moreover, as we have large capacities of spinning yarn, this would be added advantage to India. Technical textiles is another sector which Indian manufacturers can explore as currently China is the only competition to India, amongst Asian countries.

But, due to low quality machinery supplied by China, European machineries are in demand. So, India has all potential to capitalize the opportunity.

Stable government and favourable government policies like 100 per cent FDI, gives very good opportunity for foreign machinery manufacturers for investment in India. India is definitely better option compared to China considering the cost effectiveness.

In India, there are less chances to copy & replicate the cheaper option of machine due to stringent copyright laws and Indian values. So, manufacturers are well assured for confidentiality of their machine design. Indians can explore more options of tie-up with foreign machinery manufacturers for the technology support, this will improve the standards & quality of Indian machinery.

We also need to focus more on R&D to manufacture high standard textile machinery, which is required for our own consumption first so that we can reduce imports and may think of exporting appropriate technology to other developing countries.

The Government has already declared ‘Make in India’ to boost manufacturing sector. It should also support the R&D activities and allocate special funds for development of R&D centers. Our education pattern should develop research and innovation based concepts for textile engineering students so that the real growth happens within our country.

Low material costs and operating costs along with our own huge market will give India an edge over other countries.

Avinash Mayekar is MD & CEO of Suvin Advisors.

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